With oil price falls so far this year of over ten percent, it has become less profitable to bet on new or continued production. This is evident in the IEA's (International Energy Agency) assessment for 2025, writes Financial Times.
The forecast is that investments in oil production worldwide will fall by six percent this year. This is, with the exception of the corona pandemic, the largest decline since 2016 when the oil price plummeted to below 30 dollars per barrel. Today, the price is around 63-65 dollars per barrel.
US production of so-called shale oil, which accounts for 15 percent of the world's oil investments, is particularly price-sensitive and is expected to decrease by ten percent this year, according to IEA.
Even the world's major oil producers are expected to reduce their investments since they have begun to prioritize shareholders' return requirements to a greater extent. At the same time, they are reducing investments in cleaner energy significantly, 25 percent less than in 2024, according to the assessment.
Overall, including coal and gas, investments in the extraction of fossil fuels are expected to decrease by two percent this year compared to last year.
